Shiller on a US share market crash

Professor Shiller’s Crash Confidence Index measures responses from both institutional and individual investors in the US to the question: “What do you think is the probability of a catastrophic stock market crash in the US, like that of October 28, 1929 or October 19, 1987, in the next six months, including the case that a crash occurred in the other countries and spreads to the US?”. The index for individual investors currently stands at 24.49, the lowest level since February 2013. In May 2017 it stood at 35.07, a two-year high – but has come down ever since, suggesting investors are less worried about a crash before this year is out. Institutional investors seem less sanguine, with that in

Beware mortgage funds - losses or fund freezes could be occurring over the next few years ...

Key points: In "normal" times, mortgage funds with conservative LVRs can be good stable fixed interest investments earning a better return than cash. And we did recommend some mortage funds up until somewhere like 2003 or 2004 or thereabouts. But we ceased recommending them then because we could see the rising private debt bubble in Australia .... which as you know, accept for Japan post 1989, has always been a pre-cursor to economic depression in countries like Australia and USA - going back 150 years. In the 1930s and 1890s economic depressions, house prices in Sydney and Melbourne fell about 35%, and major house price falls can result in major losses for lenders such as mortgage funds. An

When will the US share market crash?

The Austrian School of Economics argues that excess money supply causes inflation. https://en.wikipedia.org/wiki/Inflation#Austrian_view "The Austrian School stresses that inflation is not uniform over all assets, goods, and services. Inflation depends on differences in markets and on where newly created money and credit enter the economy" https://en.wikipedia.org/wiki/Austrian_School Usually, it creates consumer price inflation and aseet price inflation in due course. But sometimes, the inflation occurs in ways that some people were not expecting. http://www.businessinsider.com/money-printing-caused-asset-inflation-2015-12?IR=T https://finance.yahoo.com/news/the-fed-caused-93--of-the-e

US Federal debt explosion could lead to "insolvency problem". Gundlach

US fund manager Jeff Gundlach says “This is almost like a suicide mission,” he said. “At some point, with debt and its service cost increasing, there will be a collision. There could be a solvency problem.” https://www.advisorperspectives.com/articles/2018/06/13/gundlach-federal-debt-is-on-a-suicide-mission?%3Ftextlink= The following chart of US Federal Debt comes from Jeff's presentation https://www.advisorperspectives.com/pdfs/2018-Slides/6-12-18_TR_Webcast-FINAL.pdf

Global Debt dangers - Kenneth Rogoff

Key quotes: "Are brewing exchange-rate and debt crises in Argentina and Turkey localized events without broader implications? Or are they early warning signs of deeper fragilities in bloated global debt markets that are being exposed as the US Federal Reserve continues to normalize interest rates?" With an economy ten times the size of Greece, a default in Italy would blow up the eurozone. It is notable how much the IMF, the world’s debt and financial crisis watchdog, has been ratcheting up its warnings. After years of saying advanced countries no longer need to worry about their near-record public-debt levels – now averaging over 100% for general government debt – the IMF has started to war

Risk of another major crash greater than 50pc - John Hewson

John Hewson says ( http://www.abc.net.au/news/programs/the-business/2018-06-08/john-hewson-speaks-to-the-business/9851744 ): "Complacent investors are missing the warning signs of what could be the next global financial crisis according to former federal Liberal leader John Hewson. He says there is a real risk of a global trade war akin to what happened at the height of the great depression and its incumbent upon politicians and regulators to fess up and talk straight about the risks." There is a risks of another major trade war similar to what happened at the height of the Great Depression and that it is encumbent on politicians and regulators to "fess up" and talk straight about these ris

Global trade shifts to the East

A feature of global GDP share increasingly shifting to the "emerging world", the same is also happening with Global trade. This can be seen in the chart below. https://www.statista.com/chart/8957/international-merchandise-trade-by-type-of-trading-partner/ https://www.martincurrie.com/institutional/uk/insights/how-emerging-markets-are-transforming-global-trade https://www.wto.org/english/res_e/statis_e/wts2016_e/wts2016_e.pdf https://www.wto.org/english/res_e/statis_e/wts2016_e/wts2016_e.pdf https://ourworldindata.org/international-trade

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